Google Predicts Australia Tech Boom

Technology startups in Australia could contribute nearly as much to the economy as the retail and education sectors in two decades’ time, according to Google Inc.

Reuters

Google’s study, co-authored by PricewaterhouseCoopers, predicts Australia’s technology entrepreneurs could contribute up to 109 billion Australian dollars (US$112 billion) a year to the economy and directly employ 540,000 people by 2033.

If achieved, that would mean tech startups would make up 4% of Australia’s GDP. That’s almost on par with education and training, Australia’s third-largest exporting sector accounting for 4.2% of the economy, according to government statistics. Retail and trade contribute 4.4% of GDP.

Currently, the fledgling tech industry employs just 9,500 people and contributes around 0.1% of the country’s economic output—less than arts and recreation—according to Monday’s report.

“It’s really since 2007 that we’ve gained a tech startup culture,” PwC partner Jeremy Thorpe, who worked on the report, told The Wall Street Journal. “We missed, in a sense, the first tech boom and we’re late for the second tech boom, so we’re coming from a weaker position.

Predictions that Australia’s tech sector will boom in the coming years are nothing new.

Industry participants point out that many of Australia’s best tech minds have returned south in recent years, fleeing the economic uncertainty in the U.S. and Europe in favor of one of the few developed countries not to have fallen into recession.

Banking and mining are siphoning off fewer engineering graduates these days, while the growth of industries like healthcare is creating more opportunities for people to launch innovative new products.

Meanwhile, Asia’s rise and the growing pool of capital in Australia have made it more attractive to international investors. That became clear this month when Twitter bought Australian music start-up We Are Hunted, sparking speculation the U.S. company may be hoping to follow Spotify down under.

Part of that is the dearth of skilled entrepreneurs in the country, where less than 2% of domestic graduates have computer science qualifications. Stringent regulations also preclude many small companies from the A$41 billion of contracts the government puts out every year, according to Google’s report.

Venture capital is also in short supply. In 2012 only A$53 million was invested in 62 first-round deals in Australia. In Silicon Valley and San Francisco, that much went into angel investments in the third quarter of last year alone.

But even more important to jump-starting the industry, it seems, is a sea-change in attitude to entrepreneurship.

While Google and PwC reckon Australia ranks ahead of other developed economies, such as Israel and the U.K., as a favorable environment to start up a business, it languishes in terms of entrepreneurial spirit. On that scale, even Europe’s economic pariahs—Greece, Spain, Italy and Portugal—rank higher.

“We need to act now so that we become a nation of creators,” said Alan Noble, Engineering Director of Google Australia.